Vivendi Chairman Vincent Bollore has cemented a pact with Italy's Berlusconi family with a share swap to buy their Mediaset Premium pay-TV unit.

While Vivendi's rationale for the deal makes sense at first blush, the alliance further blurs the line between Bollore's personal interests in Italy -- he owns stakes in Mediobanca and insurer Generali --- and those of Vivendi. It also raises governance concerns at Telecom Italia, where Vivendi has spent more than 3 billion euros ($3.2 billion) to become the biggest shareholder, wielding effective control.

First the official explanation. Vivendi says the all-share deal for Mediaset Premium, a loss-making pay-TV service that competes with Rupert Murdoch's Sky, will fuel growth at its French Canal Plus unit, boost its production of movies and films, and help it create a video-streaming service to compete with Netflix in France, Spain and Italy.

Italian Duel

Mediaset Premium lags Sky in Italy on pay-TV penetration, but it does have the European Champions League soccer rights to 2018

Source: Bernstein Research

But as usual when billionaire corporate raider Bollore is involved, the deal prompts more questions than answers. Minority shareholders at Telecom Italia, Mediaset, and Vivendi should be on their guard.

Political factors, always an issue for regulated telecoms businesses, could become more complex. With Bollore's Vivendi now tied to Silvio Berlusconi's family, the de facto alliance between Telecom Italia and Mediaset could play out badly for the former phone monopoly. Current Prime Minister Matteo Renzi is already backing a rival fibre broadband build-out by utility Enel, which would sap Telecom Italia profits.

There will also be governance and commercial concerns to manage once Vivendi and Mediaset are linked.

For example, Telecom Italia is a customer of Mediaset, since it distributes its premium content to broadband customers. Once Bollore's Vivendi owns Mediaset Premium, it will be in the odd position of effectively negotiating with itself at Telecom Italia.

With Vivendi's four board seats, nothing can happen at Telecom Italia without Bollore giving the nod. Vivendi has already pushed out the CEO and killed a plan to reform Telecom Italia's archaic dual-class share structure.

Arguably, it would've made more sense for Telecom Italia to buy Mediaset Premium itself rather than have Vivendi as intermediary. Spain's Telefonica and Britain's BT have made similar moves to buy premium content to sell more broadband packages and keep customers loyal.

Telecom Italia would have been able to offset the 115 million euros of Ebit losses at Mediaset Premium by winning more broadband customers.

Slow Going

Mediaset Premium has grown sales slowly but remains loss-making

Source: Bloomberg data, analysts

Another governance test looms. Telecom Italia is evaluating bids for a 45 percent stake in Inwit, a mobile towers company it spun out last year. One is from a consortium led by Spain's Cellnex, reported to have bid for the whole stake in a deal that would lead to a mandatory offer for all of Inwit.

The other is from El Towers, controlled by none other than Mediaset. It only wants 30 percent but has offered a higher price per share. Telecom Italia would have to keep the residual stake and there would be no mandatory takeover.

Oh, to be a fly on the wall when Telecom Italia's board debates each bid. Although Bollore isn't on the board himself, Vivendi has four seats. Another old Bollore ally, Tarek Ben Ammar, is also on the board; as he is at Vivendi.

Shares in Telecom Italia have fallen 22 percent since June when Vivendi started building its stake, compared to a 14 percent decline for European peers.

For shareholders, understanding Bollore's moves is getting harder as he advances his chess pieces in Italy and elsewhere. What might be good for Vivendi holders may not be for Telecom Italia or Mediaset; and untangling whether Bollore is prioritizing his own interests is nearly impossible. Caveat emptor.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.